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tv   Varney Company  FOX Business  February 26, 2013 9:20am-11:00am EST

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yard dash. he ran the distance in a very slow 4.82 seconds. imus: i've seen fat linemen run it faster than that or as fast. >> that's right. he came in 20th of the 26 line backers. imus: but how is he as a linebacker? >> he's okay, but he's not a first rounder. he might not go in the second round. imus: just because he can't run the 40 in 4.5 or 6. >> you've got to move. you're going to cover a receiver? come on, of course, he had an excuse. he said i could have gone faster, but in an imagery woman kept holding me back. imus: you're a vicious hater, warner. [laughter] tomorrow on this program, doris kearns goodwin, blond on blond and clive davis. and speaking of music happy birthday to one of the greats, one of the architects of rock and roll, he's 85 years old today, the great fats domino. ♪ you made me cry ♪
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♪ when you said goodbye ♪ ♪ ain't that a shame ♪ ♪ my tears fell like rain ♪ ♪ ain't that a shame ♪ ♪ you're the one to blame ♪ ♪ you broke my heart ♪ ♪ when you said we'll part ♪ ♪ ain't that a shame ♪ ♪ my tears fell like rain ♪ ♪ ain't that a shame ♪ ♪ you're the one to blame ♪ ♪ oh, well, goodbye ♪ ♪ although i'll cry ♪ ♪ ain't that a shame ♪ my tears fell like rain ♪ ♪ ain't that a shame ♪
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♪ you're the one to blame ♪ ♪ imus in the morning ♪ >> political blackmail takes to the road today. the president will threaten disaster, catastrophe if we just cut two cents on the dollar. good morning, everyone, he'll go to virginia, he'll speak in the military town like a campaign stop. military readiness will suffer and jobs will be lost because the republicans are protecting the rich. the president will spell out the pain from spending cuts and blamist opponents. there's a lot more happening with your money today. europe is again in chaos. bonga bonga berlusconi is back set the stage in italy. vice-president biden says don't worry about that, trouble there
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is not a problem here. really? and within the hour ben bernanke tells us what he's going to do. how on earth can he stop printing money when the president talked disaster for america and berlusconi brings disaster to the euro. yeah. "varney & company" is about to begin.
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>> good morning, everyone, we're watching the three b's that are important for your money today. first of all, silvio berlusconi previously accused of sex with an underaged girl is back, don't worry, berlusconi says italians should ignore those crazy markets. we cannot ignore our markets. the dow dropped 200 points yesterday when the news of the berlusconi power play came out and just more evidence that what happens over in europe affects our money here, no matter how farfetched it might seem. as the chaos was breaking in
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europe. vice-president joe biden said don't worry, what happens there is not a worry here. listen to this. >> we're no longer worried, i think, about our economy being overwhelmed either by europe or at large the eu or china somehow swallowing up every bit of innovation that exists in the world. they're no longer, i think, worried about our -- our economy being overwhelmed beyond our shores. stuart: a little awkward on the timing there and finally, ben bernanke will give his update on the economy to congress today. is he going to keep printing money to make up for the dire spending cuts that could start friday or to protect the economy against europe? what's he going to do? is he going to keep printing money or not? we'll be here right at ten o'clock to find out exactly what he's going to do. it will affect the market. all right, next, we're following up on the big story, the big stock selloff and ask, why do the italians have such a big
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impact on our money and plus, the governor of kansas, we'll ask sam brownback his push to eliminate the income tax. and i've got good news on housing, too. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade.
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all on thinkorswim. we asked total strangers to watch it for us. thank you so much. i appreciate it. i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money? if your bank takes more money than a stranger, you need an ally. ally bank. your money needs an ally. >> all right. we're a minute from the opening bell. and joining the company from chicago we have trey knippa.
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a direct link between what happened in italy and our markets. why do we go down when there is he' trouble over there? >> guess what, the italian economy has a world of changes that need to be made. there's a ton of problems there and the italians have just voted to make it worse. not better. we're seeing the erosion of one of the great societies in the history of the world and it's the voters doing it to themselves. there's lots of things that need to change there and like i said the italians voted to go backwards rather than forward. stuart: real fast, five seconds, you think there hurts us, lowers our growth rate here, does it? >> it it lowers the great rate in europe and nationally affects the global economy. absolutely, it affects us. stuart: stay there. i want to talk gold in just a moment. the opening bell sounds moments from now. i want to tell you, there is he' a news background here on the housing market. in december, home prices up 6.8%
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over the previous year, a pretty solid performance on home prices. still a pribright spot for the economy. and an upside move, the dow is back up by 23 points and expecting again, 50 points in the early going and please remember, it was down 200 yesterday. let's deal with individual stocks, we've got a big name you know, home depot, it made a billion dollars profit in 13 weeks and it's raising its dividend. i presume, nicole, if we use home depot as an economic indicator, it's good news. >> it does seem like good news. and some of this comes from hurricane sandy relief. the stock is up over 2%, it is a dow component and we'll have things along. the other thing he we should note for the 15th straight quarter, outstripping lowe's and by the widest margin as well. moment depot is doing very well. and the ticket says that people obviously when they're checking out, they're spending more, too. >> that's a good one. an economic indicator. thanks, nicole. the dow indeed opened 50, 60
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points higher and rebounding a little bit from the 200 point loss yesterday. let's not forget about gold. goldman sachs cut its forecast to $1600 an ounce for this year. i want to go back to tre tres knippa. ben bernanke, any way he's he not going to be printing up money and europe printing up a storm, too. why isn't gold spiking? you've got to tell he me. >> gold is volatile. it's going to move around and gold is caught up in asset allocation switches. you continue to watch a lot of the financial channels and analysts and they're going to tell us that the stock market can rally, 20, 30% from here. what investors do, sell assets in one class and move to stocks and i think you're seeing a movement in asset allocation, but the news in italy certainly supports gold for sure. stuart: okay, long-term, tres,
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thanks for getting straight to the point. young man. very good. let's get back to how italy is affecting our markets. and joining the company is the senior research fellow at the center at george mason university. veronique, welcome back. >> thanks for having me. stuart: maybe the italians will be a lot better off dumping the euro and experiencing a lot of short-term pain and getting back to the lira to devalue it whenever they like. >> right now there's a strong case for italy to get out of the euro and probably beats the slow torture they're going to go through. even though, ill he' say it, maybe the decision won't be up to them and as well for other countries. and the markets may end up deciding for them. stuart: and they reject the slow torture. >> i agree and this is one thing we don't hear often. it's not a victory of berlusconi, or grillo, it's actually a defeat, a big loss
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for the european bureaucracy. the area of mario monthi is ove. >> why should their trouble affect our economy and markets here? >> one of the straight forward things, these markets are global, right? and the fear of what the collapse of euro and connection with the u.s., first the u.s. has a lot of investment in europe, so, i mean, these kind of uncertainty, they trigger and they spill out, but there is another big thing. and the u.s. based a lot of kind of prospective growth on experts and when you don't export. when the countries are buying your stuff are doing really, really badly, that's another kind of channel for trouble for us. >> and one last one. i'm told that austerity is the result of spending cuts in europe. is that accurate? >> hardly. hardly. i mean, there are some countries who actually cut spending a little bit, but these countries have also overwelcomingly
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increased taxes. >> that's it. it's a tax increase as opposed to a spending cut produced this misery? >> and by the way, alberto al seena of harvard and some of the co-authors have shown this is the worst way to reduce debt to gdp ratio. this balanced approach, the president likes, the mix-up can prevent spending cuts, but absolutely real tax increases. stuart: veronique de rugy, you make a lot of sense. you'll be back. and nicole? >> macy's, up. and comp sales doing well, beating the street. the one thing i found interesting in this report, when you get the numbers in, here is the case, they're actively wooing the millennials, shoppers born in and around the 1980's. what they're doing is working on
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their technology and their on-line shopping. all of this to continue to just keep those sales going, not only for older folks, but for the younger folks, too. >> tell me about saks as well. they're in the news. >> and saks is in there as wellment and both doing well, and it's also higher, just like macy's, but it's up about 1/2 a percent. we were up 80 points and modest bounce back from the big drop yesterday. everybody waited to see at ten o'clock will ben bernanke keep printing money? that will make a market difference. >> our next guest, well, he wants to phase out the income tax in his state completely. kansas governor sam brownback. governor, welcome to the program. i'm glad you could join us, i know there is he' a huge snowstorm there and couldn't let you travel in new york. well, look, i've got to ask you about this phasing out of the income tax. are you specifically trying to
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encourage tax rrefugees and businesses to come to your state. >> we're trying to encourage anybody that's interested in growth and well, on building a strong future and a family to come to kansas because we think we've got the best atmosphere in america to grow a small business and to raise a family and it's right here and we hope you come from all over the world to kansas. >> you're doing the exact opposite from what the administration is doing nationally. are you getting much support? . [laughter] well, i'm getting a lot of support from people actually voting with their feet. i'm not getting so much support and love from the administration. >> wait a minute, people are voting with their feet. are you telling me that people are going to kansas because of the tax environment that you're proposing? >> we had the largest number of new business filings last year we've ever had in the history of the state of llc's and sub-s's and right now you can come to kansas and llc and subs income pass through at zero tax.
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stuart: where are they coming from, governor? . the past migration numbers we have better information for than the current, but they're coming from higher tax states. we get people from maryland and california. we've lost people historically to texas and florida. >> okay, governor, i've got to go back to that snowstorm, i know you're hit by the second big storm in about a week. and i just, tongue in cheek, i want to ask you, are you blaming climate change? >> no, and we need the moisture. unfortunately we've had two fatalities, but it's nice to get the moisture we're getting from this, but i'm not blaming climate change. >> governor sam brownback, thank you for joining us, sir, we appreciate it. >> my pleasure. stuart: yes, sir. we will be bringing you breaking news at the top of the hour. find out exactly what ben bernanke plans to do at the fed. is he going to print or not print. or pause in the printing presses? it will likely have some significant market impact. we're watching it and we'll have the details for you right there. ten o'clock eastern this
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morning. and we want to know what you think about all the stuff we deal with. we always want to hear from you, please send us your e-mails, now, i've got your seven early movers this tuesday morning, j.p. morgan, listen to this is going to cut 4,000 jobs taking out a billion dollars worth of costs this year. market likes it, it's up just a little. the department store dillard's down 10% yesterday after reporting disappointing profits, no bounceback today up 2 cents, that's it. we can expect sales at radioshack, lower profits at autozone, kind of a mixed bag and no reaction on the stock, it's up two bucks, that's it. wider loss at caesars, less money came in and that puts the stock down about 1 1/2%. no, 4 1/2%, disappointing outlook from the shoe company steve mann, down it goes, $2
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lower. and improving housing market and hurricane sandy helped to boost home depot profits. nice gain, a dow component henning the overall market up 4% there. so let's check that market. we're up 82 points on the dow now. remember, we were down 200 points yesterday. the progress of the market really entirely depend on what ben bernanke says at ten o'clock this morning and you will know when everybody else knows. we know. the price of-- let's check the price of oil, that came down a lot yesterday. down a bit more today. $92 per barrel. as for the price of gold, it's been falling, near seven-month lows and after the break i've got a guess who says people are using the drop in price as an opportunity to buy. they're buying gold coins. we'll have the numbers for you in just a moment. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly
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understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company."
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>> the price of gold may be
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moving lower and our next guest says, doesn't matter, you are buying more of those gold coins. and joining us from dallas is david of coin let's define the thing, you're not a trader, grinding any ax to buy you're an objective reporter on the price. >> that's correct, i do not buy and sell gold to make a living. >> good. i want hard numbers. tell me about the increase in demand for gold coins. >> well, the united states government sells the american gold eagle and they release monthly numbers and the numbers dropped off on the sales in december, which is typical during the holidays, january, they were up over 150,000 ounces. february's only halfway through and they have only 60,000 ounces sold so far and last week when the price of gold dropped and heard the analysts on some of the financial station said that
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gold had seen its day and the market turned, i admit i was a bit amused. the price of gold affected is affected by the commodities prices and the actual buying and selling where people are physically taking possession of it takes place through stores and retailers of gold coins. when i talked to the traders in the rooms selling those, when gold had dropped. they said it was like a mad house, that it was insane. people were buying more coins, more physical gold, during the drop in gold, because it represents a buying opportunity. >> your numbers relate to the official united states gold one ounce coin, direct? you said 150,000 ounces in december. is there any evidence, i'm sorry, didn't do it-- there is there any evidence that other gold coins, canadian maple leaf, examination, are she selling strongly as the price goes down? >> don't have the exact research
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because not all countries are as forth coming with their information and relationships getting that information. from reports of traders i talked to, depends on the part of the world that you're in. the united states, american gold eagles are most popular. the asians prefer gold coins that are 24 carat more in line with the maple leaf and the chinese panda. all around the world, the physical possession of gold from the different countries is at least equal or consistent with what it's been. the individual gold coin buyer, seems to believe that when prices go down, they'll buy some more, seems to believe that gold is bottoming out. now, i know you don't trade this stuff, but give me an opinion. is gold bottoming out around 1550 and goes up from here? what do you think? >> stuart, you're right on the money. 1550 is the support line, the one that traders look at that's been tested, three, four, five times and i think it broke at one time in the last year, 1548 perhaps, but 1550 is pretty much the bottom that's looked at and
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look at ourselves today, just waiting for the news of what the money supply is going to do. the countries of the world and the individuals of the world look at gold as a protection. it is an asset that's nonperforming. they put it away. you bury it in the back yard or stick it in your bank vaults. it is the commodity that allows you protection in a time of economic uncertainty. stuart: all right. david, objective observer of the gold market. thank you very much. appreciate it. >> thank you for having me, stuart. >> let's move on to google, shall we? a pretty good company to work for, i'm told. free food, free hair cuts, a quick game of ping-pong or pool while you're working and you can even do your laundry on google's campus, now, wait for it. it could be getting better, really? what's better? liz and charles are here and they're going to react to google's 120 million dollars upgrade to the google plans.
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>> while yahoo!'s chief is ordering workers to get in the office or quit. no working from her she says, uh-uh. and google is making its office
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more worker friendly. 120 million dollars expansion to the luxurious headquarters in mountain view, california. all right, i've got to ask the question. would you want to live basically at work in this upgraded google plex? >> i feel like we already do live at work, but you know-- >> you share a next door office to me. >> that's right, and i hear you winging stapleers. and they're got to bowling alleys and pool tables and restaurants and showing the way how to do it, you know. stuart: you think it's good? >> yes, if workers want to work there and work more, sure, why not. >> you'd want to be surrounded by your fellow workers, day in and day out daily? >> it's a smart decision. as long as you make them work. and the skate ramp all day and i think it's counterproductive.
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if it's free food and things like that, why not. stuart: and i disagree. look at marissa mayer, no working on the internet from home. now, you come into the office. when i first heard that i thought, what on earth that's all about? this is the internet, for heavens sake? >> i love it 1,000%, as a bbsiness owner, this i'm working from home thing is 100% crap. only 2%, 3% of americans know how to work at home. i'm a workaholic, i know how to work from home. most people don't know how to work from home. as a business owner, it's the kiss of death if you have too many people working from home. stuart: that's strong stuff. >> it's a disastrous. >> i agree. yahoo! is performing nicely under marissa mayer and a notorious floating cost infrastructure. stuart: hold on a second. business insider says that marissa mayer actually has a nursery attached to her office.
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so, she doesn't have to go home to work, no, she's got her child right next door to her. >> right, a lot of companies do that. stuart: how many people have special offices with a crib for a child, a baby, right next door to them? >> listen, if she's working around the clock, i have no problem. stuart: that's opposite why the women with children want to work it it from home. >> by the same token, they don't work. you can do some things. take care of a project, maybe, if you can get it done. if you've got to get up every time the kid makes a noise or boil some water, and it just doesn't work. people don't work when they say they're working from home. >> you're saying this is really an issue for working mothers? >> i think primarily, yes. i think it is. marissa mayer is in a very fortunate position being the chief executive officer to have it right next door. >> and everything she gives herself she would offer for employees as well. if they don't have that and she has that luxury, and certainly
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hypocrisy, a smidgen of hypocrisy. >> she will hear from her workers. stuart: you would be okay with your employees, i know you run a separate company. okay with their employees bringing them with them-- >> they bring them all the time. stuart: they do? >> i've got a tv, videos, spongebob, videos and bring them all the time. >> bring their dogs, too. stuart: eight hours a day, really? >> all the time. stuart: you live and learn. all right. next, will ben keep printing? we have the answer at the top of the hour, the markets will most likely react to this. stay right there, and watch it go. we know all your investments may not with fidelity, but we can still help you see your big picture. with the fidelity guided portfolio summary you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity.
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call the number on your screen now! stuart: moments from now, ben bernanke speaks. it's one of those critical moments when the world hangs on every word. america's economy is clearly slowing. president obama says we will take another hit from the spending cuts that start friday. and in europe, italian voters have rejected economic misery. they brought back politicians who threaten the very existence of the euro currency. that is a chaotic backdrop to the bernanke speech. here's the key thing to look for, will he keep printing money? all right, now, look, we have got peter barnes with us. he has advanced copy of bernanke's reports. he's going to tell us all about precisely what ben bernanke pro poses to do. -- proposes to do. at the moment the dow industrial average is up 108 points. seconds from now we will find out what ben is going to do. right now, peter barnes is he going to keep on printing?
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peter: yes, he is stuart. he says that the fed will continue quantitative easing until it sees, quote, a substantial improvement in labor markets and right now he says that labor markets remain generally weak despite -- despite some gradual improvements. printing presses are going to keep going. stuart: you got to the key point and the market took up some more on that news, now up 121 points. at the last meeting two fed members apparently said they didn't want to keep on printing money. any hint that bernanke was listening? peter: yes, he does say that he is looking at the benefits as well as the costs and risks of continuing this easy money policy, but he says that right now, he feels that the benefits to the economy outweigh the costs and risks. stuart? stuart: great job, peter, right there first in line with what exactly ben is going to do. let me repeat everybody, ben bernanke is going to keep on
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printing money. that means he's going to continue to try to stimulate america's economy. company, come into this. i think this was expected. nobody expected him to say no, we're going to turn off the spigots right now. it was expected. what do you think? charles: there was a little anxiety though. listen, from the minutes that came out, albeit they were old, but the minutes put a little bit of anxiety into the mix which i think is interesting because this is not man bites dog kind of headlines. ben bernanke's always stretching for an elegant way to say the economy is still not good. stuart: i want to get your thoughts in a moment liz. new home sales up 15.6%. that's month over month. very strong gain that is. month over month up 15.6%. the best gain since 1993. that may also have something to do with the dow industrials up 120 points. remember, earlier, we got case shiller on home prices showing what was it a 6.8% gain year on
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year. back to ben and printing, your input, liz. liz: goldman sachs is already warning that easy money policies may stay in place until 2016. meaning 0 rates. and so what goldman sachs has already been warning is with the federal reserve buying bonds to help keep those rates low, essentially they are saying that look, they, goldman sachs, will not be the buyer of last resort when the federal reserve stops. that puts pressure on the big banks who have been buying bonds too. the too big to fail banks will be a stress in the marketplace once the federal reserve stops buying. whether or not they can pull this off is going to hinge heavily on the new treasury secretary jack lew, whether or not he can jawbone a stronger dollar and basically quiet down the bond markets when the unwind happens which is going to be a few years out. stuart: one more positive item for the market and the economy, consumer confidence, nice strong reading came in just a few minutes ago, a reading of 69.6. a reading of 58 the month before.
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that's a nice gain in consumer confidence. to recap, i've got this right, ben bernanke says he is going to keep on printing because the american economy is weak. charles: right. stuart: one big investment firm says he will keep printing till the year 2016. that is way out there. that's very bullish for the market. the dow jones average is up 117 points. recapturing 13,900 as we speak. to nicole, home depot, big winner, and that's a dow stock. i think its win is giving what 25 points to the dow. nicole: it is adding 25 dow points right now. it's obviously gained since we last spoke. now it's up nearly 6%. it started off the day about 3% to the upside. gaining some momentum up nearly 6%, and this is obviously on a great quarter. hurricane sandy relief, people were running in there to buy all they needed. they have outpaced lowe's by the widest margins in the latest quarter but for 15 quarters in a row. the outlook is a little bit
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tepid, but that doesn't seem to matter here today. it's all about home depot. we talked about the fact they are doing a lot of hiring for the spring season because that is their christmastime, people get ready for the spring and summer for their homes. stuart: interesting big picture indicator if you ask me. nicole, thank you. ben bernanke will keep on printing money. he's about to testify on capitol hill. he is going to give his prepared remarks and then he will face questioning from a variety of senators, republicans and democrats. we're going to take you there when the questioning begins. now, i imagine that the questioning is going to be relatively friendly on the grounds that if ben is still printing, he is still trying to stimulate the economy, and the democrats will like that. i suspect that most republicans will not exactly like it, but they are not going to give him a hard time because he's printing more money. we will see. we will bring you the q&a when it begins. i want to move on to the other big story of the day, which is president obama on the road.
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today he speaks at a shipyard newport news virginia he's going to tell ship builders that those budget cuts will hurt middle class families, all part of basically a campaign of pain for political gain. even the new york times recognizes this. the times here's the lead editorial from today's paper. i'm quoting a section of it, quote, the white house released warnings for every state of the nation on sunday in the hope that angry voters would besiege republican politicians. i still find it hard to believe this kind of political blackmail is going on today. liz: it is astonishing. the message here is you taxpayer you work for the white house and the congress, they don't work for you. listen, tom coburn, john mccain, a number of g.o.p. officials are saying down size d.c., the federal government did grow under this white house. and so the cocoon of washington, d.c. continues. they feel they have a claim on taxpayer money to continue to grow the government. and d.c. spends while the rest of the country gets a hangover.
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stuart: it is not like we're going to actually cut spending. we're not. we're going to spend more, just a little bit less more. charles: we're not going to cut spending. just the rate of the increase in spending. the idea that you would have a leader that would lead through enthusiasm, optimism, and occasionally say we have to go through rough patches, maybe it doesn't sell in this country, maybe it doesn't sell around the world, i'm looking around the world you have a new leader in south korea you know who is promising all kinds of things they can't afford. berlusconi in italy, maybe people don't want to hear that occasionally things get tough particularly when the government is 16 point something trillion already in the hole. that's an amazing thing. stuart: john boehner just had something to say about the president's trip to newport news. he says the president is using the military as a campaign prop. charles: i call them human shields. some people thought it was pretty offensive. but when you bring children out there, people in uniform all the time, they are human shields to
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back up a flawed agenda, an agenda that ultimately will destroy everyone. wait till we all have to pay for this. liz: the president has come up with proposals. the house has sent two proposals to the senate that have been rejected. john boehner is essentially saying that the white house needs to come up with solutions rather than complaining and alarming the public needlessly, because the cuts can be done easily without being seen in the federal workforce, through the federal government. stuart: all true. thanks everybody. more than half of you are uneasy about your retirement, that's according to to the national institute on retirement security. 55% of us are, quote, very concerned that the current economic conditions are harming their retirement prospects. who better to ask about this than dave ramsey. dave, that recent fidelity study that the average retirement -- 401-k has $77,000 in it. now, when i first heard that, i thought, you know, that's an average, including 20 somethings, 30 somethings, and 60 somethings, $77,000 isn't so
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bad. is it? dave: well, if you consider that that does not include the number of people saving nothing, then, yes, it is bad because that's only the people that have an account with fidelity. and a large number of the american public saves zero, and so that makes 77,000 as an average very mathematically alarming. stuart: you want everybody who has access to a 401(k) to put in as much as they can to get as much from their employer as they can. that's your point, isn't it? dave: well, obviously, yeah. we ought to save and invest so we can retire with dignity. when we watch the circus running around down in washington, d.c., we know we're going to have to take care of ourselves. and so you need to be funding your roth ira. you need to be funding your roth 401(k). you need to be taking the employer match on your 401(k). and you need to be investing in good mutual funds that have long track records. this is the same song and dance i have been doing for 20 years, but it matters more now than
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ever. stuart: what about the counterargument? you hear this a lot, look, my social security tax has gone up. my paycheck has come down. i'm paying more for gas. i am barely getting by. i cannot afford to take more money out of my paycheck and put it into my 401(k). how do you answer that? >> well, it's kind of like saying i can't afford to pay the light bill. i'm not going to have electricity. i can't afford to eat. i'm not going to have food. both of these need to occur when you retire and both of them are going to take money. so you can't afford not to be investing long-term. stuart: all right. we hear you. but i've got one more item before you go. i think you are going to like this one. a university of minnesota study says that the number of 26-year-olds living with their parents has jumped 46% since 2007. do you stick to your -- well, here's the rule from my childhood.
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18, out. [laughter] stuart: am i harsh? what do you say? dave: this is not is a financial or an economic statement. this is an socioeconomic parenting statement. we're raising a generation of -- getting them out of your basement parents, seriously. stuart: we used to send young men off to the empire when i was a lad, you can't do that anymore. do you think maybe that's a little harsh, dave? i mean, get out -- dave: no it is not harsh. what's harsh to raise children in their only skill set at 32 years old is playing anyone tone doe -- nintendo. that's harsh. it's good parenting to teach children how to have a backbone and teach them to work. it is not a sin. as a matter of fact not doing it is. i have three grown kids. they know the program. four years in school. after that you pay for it. after that you pay for everything. stuart: i'm with you on this. i've got six kids. okay? my commitment is i will pay for
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college. i'm able to. i will pay for college. you can emerge with an education and no debt. but that's as far as i go. and you are the same? dave: absolutely. we allow one of the kids or two of the kids to come back home for 90 days or something. maybe 120 days after college to get organized and get into their big girl jobs, big boy jobs and get on with their life. but being 32 and in your parent's basement should only occur if there's an absolute emergency and should only be for a short period of time. sadly though socioeconomically, demographically we're seeing this as a major trend. what we have got is a generation that has not grown up. if that sounds harsh, i'm sorry. the problem is we're growing a generation of people who don't know how to produce and don't have any emotional dignity. stuart: would you hold on for one second. you have opened up pandora's box. i have reaction. liz? liz: wayne's world meets the golden girls is what you are talking about. does health reform in any way change the picture here? because, you know, kids can stay
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on their parent's health insurance until age 26. dave: you know, health insurance can be bought if you go get a job. you know, you can afford health insurance. liz: i'm talking about health reform, though. dave: well, even after health reform, it doesn't matter. you can buy health insurance. you can buy health insurance. all you need is money. where do you get money? you get that from a job. again, if someone has a health problem, they have a preexisting condition that's really serious, you know, we're not going to kick a 23-year-old with leukemia out in the street, that's not what i'm talking about. but this overarching macro concept of our kids living in the basement is honestly disgusting. stuart: that's the final word from our own friend dave ramsey. dave, that was really great, thank you very much. come and see us again any time. okay? thank you. dave: good to see you guys. stuart: i want to go to nicole, pulte group higher the stock that is on new home sales out moments ago. what's happening? nicole: right, the new home sales come in in january, this
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is obviously the biggest jump we have seen since the middle of 08. this is some good news here not only for the stock market but also for homebuilders in particular. look at pulte group, up 4.4%. that's a nice move. stuart: that is a nice move. i'm sure investors will take that. good indicator, as you say, new home sales were up 15% month over month. that's the biggest gain since 93. up goes pulte. thanks a lot. the dow was up 120 odd points as we got that news that ben is going to keep on printing. now it's up 86 points. i don't know why it's pulled back like this. but it has. maybe a little froth at the top of the hour. and by the way, we are waiting for the q&a session to begin in congress, q&a with ben bernanke that is. various senators will be asking him questions. we will take you right there. let's see if there's any fireworks when ben says i'm going to keep on printing. here's a number for you, 20 trillion dollars that's how much
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money people in companies are hiding overseas. are you outraged at this? all rise -- prematurely perhaps -- the judge is next. does he think we should go after that money? his answer may surprise you. first, here's what you missed if you didn't tune in at 9:20. >> it's not a victory on berlusconi, it's actually a defeat, a big loss for the european bureaucracy. i mean the era of mario monty is over. look, if you have copd like me, you know it can be hard to breathe, and how that feels. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms by keeping my airways
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stuart: gas prices across the country actually crept up a notch more overnight. the national average for regular is now at $3.78. as for the price of oil, took a big hit yesterday and it's still down, $92 a barrel. home depot released its numbers this morning, made a billion dollars profit in one quarter. that's 13 weeks. home depot said the improving housing market and a surge in sales after hurricane sandy boosted the profit line there. on top of that, it's raising its dividend. no wonder home depot is up nearly 6%. it is a dow stock too. dot com might become the thing of the past. hundreds of new internet suffixes like dot app, dot vegas and dot tech should be available to individuals and businesses by the end of the year. this is the largest expansion of the internet address system since the 1980s.
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coming up, reforming tax laws to bring in 20 trillion, what does the judge say about that? a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪
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stuart: take a look at these live pictures please. this is from capitol hill. fed chairman ben bernanke, he's delivering his opening statement to the senate. we brought you the headline at the top of the hour. yes, he is going to keep on printing. once the q&a starts, that's when we will take you to capitol hill and listen in live to all the questions that he's going to get from various senators, democrats and republicans. now this, according to a special
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report in the economist, there's more than 20 trillion dollars sitting in offshore tax havens. now, the economist wants to reform the tax laws so we can bring that money back where it belongs, either to america or various other tax jurisdictions around the world. judge andrew napolitano is here. i thought he was going to disagree with that. is he? what are you going to say? >> it's such a loaded question. bring the money back home where it belongs? it belongs -- >> did i say that? >> in fairness to you you were paraphrasing the economist. stuart: i was. >> it belongs wherever the person owned the money wants it to be. let's get this straight, if you earn a thousand dollars in the united states, you can't avoid paying income tax on that by shipping it to an offshore account. but if you earn is a thousand dollars in the united states, pay taxes on it and what's left after the taxes you put it in an offshore account and that generates interest, the question
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is, is that interest taxable in the united states? that's the dispute. the economist argues that in my hypothetical the thousand is really 20 trillion. so whatever the interest on the 20 trillion would be is a huge number, and whatever the tax on that interest is is a huge number that the governments aren't getting. stuart: should we bring it back? >> of course not. it is the decision of the person who sent it there. they've already paid taxes on it. it is their money. stuart: but the law says you must declare the interest and the dividends and the capital gains on any assets that you have overseas, if you're a resident in the united states of america. >> i understand that. one must obey the law. i'm not suggesting that people should violate the law. it is a bad law because the united states has no claim on that. it was not -- the interest on that thousand generated in the offshore account was not generated in the united states of america. so they have no right to tax it. stuart: tell me what chance of political success would you have in the united states if you went
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out there and campaigned on the issue, oh, i've got a cayman islands bank account. it is great. i'm going to put my money over there and you are not going to touch it. >> do you really think that i tailor my views to their popularity amongst voters? stuart: that's why people like you would lose. [laughter] >> i'm not running for office. i'm seeking the truth. stuart: so you agree with the economist? >> no. stuart: you don't agree with it? >> i say once you've paid taxes on your money, it is yours to send it where you want. and if it's outside the u.s., the united states government has no claim to the interest that it earns. not only i, but thousands and thousands of people around the world, i suspect my humble host secretly agree with that. stuart: look at that, not even i -- [laughter] >> would you let me join the senate committee interrogating bernanke? we would have a field day. stuart: not a prayer. [laughter]
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steen apparently rand paul who may have -- stuart: apparently rand paul who may have asked some pointed questions today, is not going to be there. >> it would have been worth covering. stuart: yes, it would have been. come on company, 20 trillion dollars sits in tax havens around the world. it's been put there by people who have high tax jurisdictions, it may be britain, it may be europe. it may be america, it may be canada, sweden, wherever. okay? should it be -- should we change the tax laws to go get that money? charles: absolutely not. to your point it is there not because individuals necessarily want it there, it is there because you have got governments already taking too much money and people are -- people want to keep it. liz: i love this attitude that only spending cuts are austerity. tax hikes are austerity. stuart: you should have listened to a guest who has done a study
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along with a gentleman from harvard that shows austerity in europe -- it is tax increases. that's what they are doing. charles: they call it austerity and then they say it doesn't work when they try to prove a point. liz: that's what tipped italy into recession is the tax hikes. stuart: austerity is wrong, spending cuts are wrong. it's tax increases. >> what krugman fails to understand is there was a natural point that when taxes get above that point, it's absolutely counterproductive and destructive, and human beings will do everything that their imagination conjures to avoid that higher rate. lower the rate, make more money, collect more taxes. he simply doesn't understand that. where does he teach? stuart: harvard -- no, princeton, your alma mater. he won a nobel prize. judge, not bad. italy is not only in political
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crisis. it really faces a crucial demographic crisis. my take is all about that next. >> announcer: you never know when, but thieves can steal your identity and turn your life upside down. >> hi. >> hi. you know, i can save you 15% today if you open up a charge card account with us. >> you just read my mind. >> announcer: just one little piece of information and they can open bog accounts,
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stuart: all right. this breaking news comes from senator mitch mcconnell responding to the president's road show, by the way which hits newport news virginia today.
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he's talking about how friday's spending cuts will bring major pain. here's what mcconnell says, quote, the president is running around like the world's going to end because of what he proposed and now he acts like he is powerless to do anything about it, end quote. now, this follows john boehner's statement earlier this hour, he said, quote, the president is using our military men and women as a prop in yet another campaign rally for his tax hikes. republican reaction coming in to the president on the road today, talking about the pain from spending cuts. check the market. we're still nicely higher. 78 point gain at this moment. remember, though, we were up 125, 130 when news of ben continuing to print first broke. now, let's make some money, shall we? here is charles with boston beer. go. charles: you know, they just reported last week. the numbers really weren't that good. but this is a company -- let's talk about jim cook, the founder. he found this recipe in his father's attic. it went back to 1860.
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he said okay went to the kitchen brewed it up. stuart: good story. charles: great story. i have to tell you a great great company and it continues to do extraordinarily well. and the big thing is we know there's major consolidation within the industry. here's the interesting thing, i don't know if you knew this, the average consumer spent 31 seconds in a health and beauty aisle and only makes a purchase 25% of the time. they spend 90 seconds in the beer aisle and they make a purchase almost every time. in other words, we know exactly what we want when we go to the beer aisle because there's so few selections. in the craft beer space, obviously sam adams made a big big move. stuart: boston beer, that's a pure play in beer. charles: yes, that's all you are buying. by the way, they are going to have craft beer in a can this summer. a lot of excitement about that. stuart: are you excited charles? have you gotten over ever clear?
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charles: it won't be 90 proof, i will tell you that much. stuart: a few days ago i was in rome. i didn't see in children and virtually no babies at all. it was striking, everywhere i went the 50 plus generation was out in force, but youngsters absent. so here's my take on italy. not berlusconi and parties, not the election, not political chaos over there, no. italy's underlying problem, demographics. a baby bust in a chronically aging population. now italy is the poster child for europe's population crisis. more and more old people supported by a shrinking workforce which is in turn having ever fewer children. first, look at the aging of italy. 7 years from now, 55 out of every 100 adults will be over 65. how can italy possibly provide pension and health benefits to way more than half its population? it simply can't do that.
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now look at the other end of the scale. babies, italians seem to have quit the baby business. the birthrate is about half what is needed to keep the population dead stable. that means the population is falling, just as it stages dramatically. throw that demographic disaster into the middle of a debt crisis and it is very difficult to see any way out. italy spends over 100 billion dollars a year, 5% of its economy to pay interest on its debt. and it must keep borrowing, and its voters have just rejected spending cuts. oh, what a mess. there is a lesson here for us. watch out for run away spending, run away debt, and totally out of control entitlements. with the spark miles card from capital one, bjorn earns unlimited rewas for his small business take theseags to room 12 please. [ garth ] bjors small busiss earns double miles
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stuart: ben bernanke is winding down his prepared remarks. he's already said that he is going to keep on printing money. if there was any doubt about that, let me pick out this one sentence for you, he said, purchases, that's purchases of government securities, that's printing money, will stay higher, comma, substantially so. so there's no pullback there on the amount that he's going to print. he's out there. he's going to print up a storm. that's a fact. however, we've got the dow now up only 58 points. it had been up 130 right at the
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time when he started his opening remarks. i want some explanation for this and charles is the man to give it to me. why is the dow up only 50 when it had been up 130? charles: well, remember, we had a gigantic sell off late yesterday. i really don't think smart players, smart money is in the market yet today. i think this knee-jerk bounce is mostly regular retail buyers. i think they are going to wait till after 3:00, get a feel of the landscape, get a feel of the interpretation of bernanke before you see buying. we could easily end up at a new high today -- new intraday high. right now the smart money is not going to commit. stuart: you mentioned all the numbers that were out at 10:00 were good. consumer confidence went up nicely so. ben says he's going to keep on printing. and we had a 15 percentage point gain month to month in new home sales. charles: right. stuart: now you picked out a number within the new home sales, median prices went down? charles: they went down to $226,400 from $249,800. i mean that's a gigantic month
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to month decline. so, you know, we get the headlines, and the headlines sometimes read great. i haven't had a chance to dive into the consumer confidence numbers. there could be something in there too. stuart: i think can explain the decline in the median new home price. and that is, it was in december. a lot of people -- charles: this is january, though. stuart: oh. charles: some of the december sell off could have come from that because people were discounting their homes. stuart: they were. they wanted to take their profit in 12, because if they took it in 13, the tax goes up. liz: capital gains tax. 4 1/2 year highs new home sales, that's a big number. stuart: still waiting for ben to finish. when he comes to an end, he will then be turned over to the senate committee, and the senators will start asking him questions. a republican, a democrat, and so on down the line. we're going to take you there. you are going to listen to those questions. not sure we're going to see any
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real fireworks today. maybe i'm wrong. but the democrats will probably like what ben bernanke has had to say. he's saying ill'm going to print -- i'm going to print. i'm going to keep stimulating this economy. that's what the democrats want him to do. senator schumer in particular. i don't think you are going to get any fireworks from the democrat side. i'm not so sure you're going to get that much hostility from the republican side. are they really going to argue against stimulus because it's ben printing money and running up the debt? not so sure about that. what do you think, charles? i don't see any libertarians on the committee. charles: someone has to give him a hard time. it doesn't matter how you -- listen, the more they print, the less purchasing power we actually have. ultimately the more harm they are doing. it's always the poorest people in this country, right, people who rent, people who don't have investments, if you don't own a house, you're not benefitting from printing. stuart: but maybe the republican senators will use ben bernanke as a vehicle to attack the president and these dramatic
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spending -- charles: -- proves that this economy is in bad shape. liz: he's talking about the need to avoid and avert the sequester. he's saying a big portion of the effect going on is related to automatic spending sequestration. he's concerned about that. stuart: let's cut to what's going on now on capitol hill. the questioning is about to start. we're going to listen. >> -- please elaborate of the sequester's impact and in the short-term if congress did nothing, and what would be the impact if there is a fight over the cr. >> as i mentioned in my remarks, with respect to the sequester, cbo estimates that it would cost about 6/10 of a percent of growth in this year. and the equivalent of about 750,000 jobs. and so it would be a drag on near term economic recovery. more broadly, all of the actions
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taken this year, according to the cbo, would be a drag of about 1 1/2 percentage points which is quite significant. so in that respect, i think an appropriate balance would be to introduce these cuts more gradually and to compensate with larger and more sustained cuts in the longer run to address our long-run fiscal issues. as you note, there are a couple of other issues this year, including the continuing resolution and the debt ceiling. again, i hope that congress could work together effectively to address these issues with a minimum of uncertainty because the uncertainty itself of course is also costly in terms of the ability of the private sector to plan to take risks and to help grow the economy. >> housing is important to our economic growth. and the fed is working on mortgage rules that will have a major impact on housing.
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chairman bernanke, do you agree with the governor that nothing prevents -- [inaudible] -- and what will you do to ensure new rules to not hinder mortgage lending? >> mr. chairman, as you know, the qrm is required to be no more broad than the qm, so we've had to wait for the qm to be done before we could attack the qrm process. although we have put out previous proposed rule makings. the qm of course is intended to help consumers. the qrm is meant to try to strengthen the securitization market, with somewhat different purposes. but i would say responding to your question, that the six agencies which are currently discussing the qrm consider the idea of making the qrm essentially identical to the qm as a realistic option and one that we are considering. >> thank you for your answer.
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also regarding -- sent you a letter on the potential impact on rules on insurance companies and community banks. i look forward to your response. chairman bernanke, there is an increased focus on security and the united states including within our financial system. the issue has been noted in its annual reports. what is the fed doing both with the banks to supervise to strengthen financial debtor protection and security in the financial sector? >> your point is absolutely right that cybersecurity concerns in the financial system have become more acute lately. since last fall there have been a number of so call denial of service attacks on banks which
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essentially flood the public facing websites and prevent the public from accessing their accounts for example. these are obviously quite disruptive and problematic. the leadership on cybersecurity for the financial system is being taken on the one hand by the treasury. on the other hand, by the various intelligence and security agencies. the federal reserve is very much engaged in cooperating with these agencies, sharing information and working with our banks to make sure they have appropriate procedures and oversight in place to deal with such problems. but i have to say we don't have to press them very hard, because they recognize it's very much in their own interest to do whatever they can to prevent these attacks from being effective. >> while some urge the fed to focus solely on inflation, which has been a bigger threat to our economic prosperity since 2007,
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chairman bernanke, unemployment or inflation, what is the most important step the fed has taken to promote maximum employment? >> well, senator, as you know, we have a dual mandate given to us by congress. that's entirely appropriate. congress should set our objectives, and then the federal reserve should figure out how to meet them. so we are interested both in achieving higher levels of employment and in maintaining low inflation and price stability. our monetary policy as i mentioned in my remarks has been quite accommodative in that respect. it's very much like that in all other advance -- essentially all other advanced economies. in doing so, we have obviously in the first instance provided support for the real economy and for job growth, through strengthening housing, for example, through strengthening the demand for automobiles and other durables, through wealth
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effects and the like. but i would note that with inflation at or below our 2% target, our policies have also had the effect of greatly reducing any risk of deflation, which at the moment doesn't seem like much of a concern, but at certain times as inflation gets close to the zero critical level, that risk increases, and keeping inflation from going too low, i realize sometimes it's hard to explain to people why inflation that's too low is a problem, but if it's too low, you run the risk of japanese-style situation where prolonged deflation is a barrier to economic growth and stability. so our accommodative monetary policy has not really traded off one of these against the other. it has supported both real growth in employment and kept inflation close to our target. we have many other things that we do in the regulatory side and so on, but the monetary policy of course is the tool that the fed has to try to address that
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mandate. >> thank you mr. chairman and chairman bernanke. as you mentioned in your testimony, the fed is currently monitoring whether its prolonged near zero interest rate policy could result in excessive risk taking and threaten the financial stability of the united states. i'm interested in what specific metrics you use to evaluate whether these risks are increasing. >> well, first, senator, we have greatly expanded our resources that we use in the monitoring process. we have created a new office for financial stability. we're working very intensively with financial stability oversight council. the amount of effort we have put into this is greatly increased. our internal monitors in turn report regularly to the board and they report to the federal open market committee. so our discussions of monetary policy include extensive discussions of financial stability issues. the kind of metrics that are used include things like leverage, our people who are investing taking on too much
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leverage, our asset valuations out of line, according to standard metrics, is interest rate risk or other kinds of risk, too concentrated. as you know, of course, the fed is also a bank supervisor. so we spend a lot of effort looking at our banks and our other financial institutions, trying to ensure that they have appropriate capital, appropriate liquidity and are appropriately managing their risk. so there's a wide range of ways in which we look at this. again, as i indicated, we're watching this very carefully. to this point, and i think this is a view shared by others on the committee, while there are things that we really have to pay attention to, at this point, they are not of sufficient concern that they outweigh the important benefits of trying to support a continued recovery. >> well, thank you. i probably would disagree with those conclusions. i know a number of my colleagues are going to get in to this issue a it -- issue a little
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further so i'm going to go on because of the shortness of time. i want to talk to you briefly about dodd frank reform. if we are able to achieve some bipartisan consensus on steps to improve dodd frank, what are some of the provisions that you think need clarification or improvement for reconsideration? >> well, first as a general matter, senator, dodd frank is a very big complicated piece of legislation. it addresses many different issues, and i'm sure there are many aspects of it that could be improved in one way or another. i recall in fact that you yourself had a bill five or six years ago on reg reform and similar -- simplification. >> that's right. >> which was a bipartisan effort to find ways to reduce costs without losing the purposes of the regulation i think something along those lines would be very doable in this context. the federal reserve would certainly be willing to work with you closely. in terms of specifics, we would want to do the work of course, but you mentioned in your opening remarks the end user
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issue, clarity on what congress would like us to do about end users, for example. another area which is proving difficult is the pushout provision for derivatives. i think more generally i think we all agree that the burden of regulation falls particularly heavily on small community banks, which don't have the -- you know, the resources to manage those regulations very effectively. so i would say as a general proposition, that we ought to work together to try to find ways to lower that regulatory burden on those smaller institutions >> thank you, mr. chairman. i appreciate your advice and your expression of willingness to work with us on these and others as we move forward to try to improve our regulatory climate. last issue at least that i will have time for in this round is i want to talk about the crisis in europe. last week the european union released its 2013 forecast for the euro zone economy and the eu
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economists predict that euro zone economy will shrink for the second year in a row and the third in a last five. what specific risks does a prolonged recession in europe present to the outlook for the u.s. economy? >> well, the risks that we've been facing for the last couple of years have been primarily financial, given uncertainties about the stability of certain countries' sovereign debt. given the risk on risk off behavior we have been seeing in financial markets. this news comes in about financial developments. the european central bank has taken a number of important steps, including most recently the outright monetary transactions which have helped to bring down the sovereign debt yields for the more fiscally challenged countries. that's been helpful. but a number of other positive steps which have generally reduced the financial stresses in europe, notwithstanding the issues raised by the italian
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election yesterday and today. and so while that remains a concern, i think the financial stresses are certainly less today than they were over the last two years. at the same time, as you mentioned, even as the financial stresses have moderated to some extent, the european economy and the euro zone is in recession. unemployment is rising, not falling -- not falling. and that affects us in a number of ways, partly through financial sector, but also simply through trade. our economy prospers when we can export. and european market is an important market for us. and we have noticed a decline in our ability to export to europe. so that's a risk as well. >> thank you. >> senator reid. >> thank you very much mr. chairman. thank you mr. chairman for your testimony. over the last several years the federal reserve has been providing stimulus to the
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economy through qe 3, through other programs, and particularly on the verge of sequestration, it seems that our fiscal policy is not complementary to your policy, in fact contradictory. as you suggest in your testimony, if we could in the short run have a complementary policy that would also add jobs rather than subtract them in the short run, add growth that we would actually do better in closing the deficit and in fact provide an opportunity in the long run to solve some of these challenging problems. in addition, i'd like your comments. if we continue to sort of use austerity as our major approach, that i presume would complicate your ability as you suggest you can do to in a measured way move away from quantitative easing at the right time.
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could you comment on those points? >> well, as i've noted, i noted again today, monetary policy is no panacea. it is no cure-all. and we do not have the ability. we can all disagree on how powerful these measures are, and i do think they are effective, but i don't think that they can offset the 1 1/2 percentage points of fiscal restraint we are seeing this year, for example. so in terms of the near term recovery, i think there is a sense in which monetary and fiscal policy are working across purposes. having said that, i want to just be clear, that i am not in any way denying the importance of long run fiscal stability. i just think that the -- to some extent the fiscal policy decisions being made are mismatched with the timing of the problem. the problem is a longer term problem and should be addressed over a longer time frame. and in a way that -- to the extent possible, and perhaps it is not entirely possible, but to
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the extent possible, does no harm with respect to the ongoing recovery. that's the kind of balance i hope that congress will consider. >> so do i. i may be repeating myself, is that if our policies in the short run were complementary, that would probably bring down the deficit faster than the current sort of course, is that your sense too? >> i don't know if it would be literally faster in the short run. one the one hand -- on the one hand, you have fewer cuts and tax increases on the other hand -- it is true you get less bang for the buck so to speak for a given cut or given tax increase because of the effect on short-term growth. so you would get a longer and a larger long run deficit impact and do less damage to the growth process by looking at these over a longer time frame.
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>> thank you very much. let me quickly turn to another issue, and that is the committee announced significantly weaker liquidity coverage ratio rules, allowing sort of the use of mortgage-backed securities as liquid assets, etc. do you intend to follow that approach with respect to the fed, particularly the cautionary words you gave us today about risk taking and adding leverage to the financial markets? >> well, i think that will be our starting point. we need to start with the international agreement and ask ourselves, to what extent do we need to strengthen it, to what extent do we need to customize it for the u.s. context. you have to remember that unlike capital, liquidity requirements are a new thing. and there was a significant amount of discussion about what was reasonable, what might be the side effects of liquidity requirements in the markets and the like. there was a bit of iteration in
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terms of what the international agreement was. but we will certainly of course meet the international agreement and then we will be looking to see whether additional steps or u.s. customization is necessary. >> we touched on the european situation, from afar, it looks like their policies of austerity have not helped them grow at all, in fact have complicated their economic situation, is that a fair judgment? >> well, austerity is not the only problem. they have obviously high interest rates and a variety of other factors that are affecting their economies. but again, i would say that it is possible to achieve both objectives, short-term growth and longer term fiscal sustainability with a combination of short-term and long-term fiscal adjustments. >> thank you very much, mr. chairman. thank you, mr. chairman.
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>> senator? >> thank you, mr. chairman, welcome again to the committee. the portfolio of the balance sheet of the fed you said 3 trillion dollars more or less. is that right? >> i didn't say but yes that's about right. >> is that about right? >> yes, sir. >> it's about 3 trillion dollars? >> yes, sir. >> you studied the fed a long time before you ever came to the fed. has there ever been that type of balance sheet close to that? >> i don't think so. >> no. does it concern you not how you put on -- add to the balance sheet, but how you might have to deleverage the balance sheet, and will that be a challenge to the fed or could it be? >> well, senator, i should comment that although the fed hasn't had a balance sheet this


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